tv Bloomberg West Bloomberg October 4, 2014 3:00pm-4:01pm EDT
>> from pier 3 in san francisco, welcome to the best of "bloomberg west," where we focus on innovation, technology and the future of business. i'm emily chang. every weekend we'll bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. to our lead story. just months after saying a full separation of paypal and ebay is a bad idea, they have changed
their tune. ebay and paypal are separating with paypal to become an independent company next year. by a had faced pressure from carl icahn and others who urged them to split their marketplaces and payment business. with this move, donahoe will leave once it is complete. american express executive dan shulman is c.e.o. designate of the new palpal company. is it a good idea? i have been asking various members of the paypal mafia that question. these are the paypal founders who sold the company to ebay in 2002. here are some of their opinions. >> there are still a lot of synergies between ebay and paypal. no matter what happens, whether they spin it out or keep it in,
there has to be a firm commercial agreement. i think that is a priority. will paypal grow faster if it were not within ebay? maybe, maybe not. would it be valued differently by the market or have a better multiple - all that stuff? i don't really care. if it spun out and had its own stock, you could motivate the management team to do more direct -- they would be compensated purely on palpay's performance. spinning out is not a terrible idea. the relationship to ebay has to be extremely strong. >> should paypal be spun off from ebay? >> i think there are very large synergies between paypal and ebay. maybe something that ebay should consider at some point in the future. but i think ebay was right to
resist carl ikahn. we don't want him to be dictating to us. >> if it was spun off, who should be c.e.o.? >> it is critical to have someone with a product sense and not someone running it as a business. >> someone from the paypal mafia? >> i don't want to name any names, but there are people there that would be good. >> you had a sale to ebay for $1.5 billion in 2002. looking back, was it the right decision? ebay, paypal have had an interesting year. some other members of the paypal mafia think they are better apart. >> it was the right decision at the time. we made it collaboratively.
part of the reason was to really get to the right level of the payment transaction system, it required a much closer connection with ebay. there is all kinds of synergies between the ebay business and paypal business. the funding mix comes from people who already have balances. now you can say look, is it better inside or outside? one can make good arguments both ways. it is a question of what is the management team and what do you build toward? >> i don't think there is any way that long-term companies stay together. the economics and the logic are breaking them apart. there is a reason why paypal has missed every window. the stripes, the squares. it is going to continue to miss as long as it is a subsidiary of ebay in san jose. if you poll the leadership team, 90% believe in spinning off the company. >> to me, this is not a question >> i'm joined on the phone by the paypal co-founder in new
york. also a former paypal senior executive. now that it is official, what do you think? what is your reaction on this incredible reversal from ebay? >> i am not sure it is incredible. from the clips you just played, most of us believe in one form or another a general feeling to get paypal its own wings and most importantly to give the management team direct correlated compensation to the performance. i am glad john is the one calling the shots. that preserves their relationship with ebay. david is worried about single digit percentage volume. that rings true. but losing that incredible volume would be a bad thing. i think on the incredible news it seems great that john is willing to pull the trigger. remains to be seen whether the management team around the new paypal will be able to realize the full potential but very hopeful it well. >> what do you think of the american express executive now in charge? i know i have spoken to many of you guys over the last few months. some of you wanted a former paypal mafia member to be ceo and indeed that is not the case now. >> i have no working past with
him. i have seen as bio but have no working past with him selling -- with him, so i am the least likely person to comment. he checks all the box in terms of having been inside. it is his opportunity to lose. obviously, it was a romantic notion to see one of our own at the helm. >> your thoughts? >> i think it was inevitable. this was going to happen. as you might know we predicted when we sold a company paypal will be larger than ebay. there were only two executives at ebay at the time who believed that. almost certainly paypal will trade at a higher market cap than ebay. >> also in terms the technology
developments, which you have been critical of, what has paypal missed and what risk does a separate paypal have now been might not have been edited when people were looking at the whole package earlier? >> paypal has missed the last decade in the united states. >> the growth has been fantastic. >> there has been a lot of international growth and have been very successful outside the united states. the united states there has been an incredible innovation in payments over the past decade and paypal has not participated in any of it.
whether it is square or stripe, bitcoin and the derivative consequences. paypal has been irrelevant in all of those conversations. basically the past decade it has been a big black hole. the product is worse in the united states that was 10 years ago. >> how do you respond to that? has paypal missed that much innovation over the last decade? >> i think in part it is sitting on top of an automatically growing revenue stream user base. quarter to quarter you are seeing 15% growth in the worse times. that is understandable if not forgivable. the flipside of paypal, it was founded over a decade ago and there are still a lot of the same code base that is powering transactions underneath. it becomes more and more scary to rewrite. to gut it, change it. even spinning it out will not necessarily solve that problem. they will still be under the quarterly magnifying glass of the public investor. i think it is inevitable that the management team will take relatively aggressive steps towards making it more flexible and offering new products and services. in this opportunity and small business lending. people or companies that see cash flow and transactional volume of a small business inevitably get into the cash flow management.
it is an enormous opportunity. >> john donahoe has told me that he personally came to you and other members of the paypal mafia for advice for what he should do. what can you tell us about what kind of conversations happened behind the scenes between you and other members of the paypal mafia and ebay? >> i think he probably in part thinks it is private. i am trying to remember exactly what i told him. to some extent the current management team within paypal, all of us are in agreement that it has a tremendous amount of
potential still, there are massive payments lending and consumer services. just massive inefficiencies in payments, lending, consumer services. i am not too worried about paypal being in the same state. just such a big market. i think we're all pretty happy that this is happening. we're hopeful. >> you have been nodding vigorously. >> i agree with all of that. that it is has been the big challenge and opportunity in front of the management team. >> they talked about the way that ebay helps paypal talking about the working capital and the balance sheet of ebay giving a lot of potential capital. how much money does paypal need to have on the side or in terms of working capital and can they do that as a separate company unless they have a very big public offering? >> it is going to be a $50 billion public company. financial services innovation is
expected. it is definitely not something -- the firm surely will raise money as well. it is not something you can do on a $100,000 lean budget. paypal should have plenty of resources. that is something that ebay helps with as they expanded internationally. >> we'll have more coming up next and be joined by another member of the paypal mafia. stay with us. >> welcome back to the best of
back to the future of ebay and paypal. our editor at large, cory johnson, keith and i were joined on the phone by another member of the paypal mafia. i asked sacks what his reaction was to the news. >> i was surprised about this announcement. i talked on your show about how i thought the spin out was a mathematical inevitability, that is the percentage of payments on paypal -- as the ebay volume went down that the spin out would make more and more sense. i give ebay a ton of credit for being ahead of the curve with this decision now. >> what do you think happened behind the scenes? this is a big reversal. we had the ceo in our office talking about why he decided not
to do this not too long ago. >> i think as the board looked at this they probably felt this was a matter of when not if. once you come to that conclusion, it makes sense to act decisively. i really applaud their decision. i think it is a very selfless move by john donahoe. i will give him credit for that. >> david, in terms of credit, we were talking of the technological prowess or lack thereof from paypal today. how strong is the technology of paypal? the growth numbers are
impressive. >> you know, one of the other big trends the last 10 years is the shift toward the developer. so i think, you know, i think there is opportunities there to update the system. this product that we really created in early 2,000. i think there is an opportunity to update the product and make it more social and mobile. you have seen some of that in the acquisition of a product by paypal. i think they mad a great acquisition with braintree. >> you said it would be a $100 billion business on its own. what do you think now? >> to be clear, i wasn't prognosticating on what it would be if it was spun out.
at the time i said that, i didn't know it would be spun out. i guess i was saying there was a pathway. if it was an independent company creating one of the largest internet companies. i still think that is approved. i think that obviously payments -- paypal is the leader. if they make the right moves over the next five years, it could be a very, very significant company. >> keith, i'll give you the last word here. challenges ahead for paypal as an independent company. >> i think that, you know, obviously the world is moving very fast. john's statement was transparent. it has evolved quickly. the innovation has been
>> welcome back to the best of "bloomberg west." i'm emily chang. oracle's co-ceo's are laying out their vision for the company. cory johnson caught up with hurd at oracle's conference and asked how different is oracle now that ellison is no longer the man at the top? >> it probably isn't a lot different. better technology. we have been working together a long time.
you'll see a lot of that here at this conference. our job is to focus on execution. we have a real exciting few years ahead of us. we just have to get our work done. >> there has been a lot of criticism of the notion of a dual c.e.o. you have seen that not work out. how do you make that work? >> we got the same comments when we had dual presidents. you should think of oracle more as a team. we have a great team, people that run our regions. we have 134,000 people at oracle now. a big company. we spend $5 billion on r & d. we have a need for great leadership. it is really a team sport. >> when you're talking to
customers now, what is the story this year? why is this year different? you have to have a theme -- you have 60,000 people here. what do you want them to walk away with? >> i think it may be over that 60,000 people. that is a lot of people. >> all i know is i got into two restaurants this week. >> i'm shocked you could pull that off. you must know somebody. >> i lost a lot of weight and can slip in. >> most i.t. budgets are not up. most budgets are flat or slightly down. they are being asked to save money and to innovate. how do i get to a new set of buyers and employees who have tools like you have in your hand? they want to work. they want to buy. they want to do things the way they have done them in their lives and they have to inovate. most of them, their applications
to run their companies on average are 20 years old. average application if this country is about 20 years old. so they were built pre-internet. >> half of all of the software in companies is custom-written. >> they are not flexible or easy to upgrade. that's why you have heard a lot about the cloud. it is the promise of more flexible, easy applications that are not customized. that are extendable. larry did a great job showing you could customize an application without changing base code. how you could move it from on premise to the cloud and back. this will revolutionize how customers think about applications. >> does that offer an opportunity for you guys to go
in and replace those custom apps with things that can be tweaked? >> we have 132 new applications. our strategy is to be the best at what it does yet at the same time, we have a suite of applications so we can do a lot of the work for the customers. at the same time, to release platform capabilities, in the cloud, that now allows those customers to extend those applications without customizing them and making them so unique that they can't be upgraded. >> you are going from this tremendous shift from licensed software. i worked for a -- that used to say that you can change the fan belt while the engine is running but it is no not preferable. that seems like that's what you're doing with your business model now.
>> i don't know about the fan belt thing. in the context of our business, and the quarter we just reported, we grew our sas revenue 32% and had that defied percent bookings which is good news because that means a revenue will grow larger in the future. and yet we still grow our own on premise software business which grew 5%. we are growing a lot in the cloud and with the announcement we made of the show, we will grow even faster as we go forward. >> i talked about the new stuff you are offering and guys i talked to were really impressed. with the offerings and things competitors have to answer to these new products. >> there are three levels to the cloud. there is what is called platform as surface, and infrastructure as a surface. and sas which is applications. our strategy is to be highly differentiated. applications is a service. that is where we want to have best of breed at each application. >> people are actually using that application?
>> there are over 60 million unique users using oracle applications in the cloud today. those could be hr apps, sales, marketing. in the cloud each one needs to be best-of-breed but a family of applications that can work together. second, there's a thing called platform for service which is the opportunity to get java and database as a service allowing for customers to build applications or extension to applications for cloud tools. this is very different because 30% of all it spending and corporate america or in the world is development and test. us of that is done on premise. they have to buy a server and license fees. you can now go to the oracle cloud get the most popular programming language in the world and the most popular database in the world and have access to those tools and do it straight off those tools with no computers and no assets to be bought. >> mark hurd and cory johnson. coming up, the technology behind
>> you're watching "bloomberg west" where we focus on technology and the future of business. i'm emily chang. the first ebola case in united states was recently diagnosed in texas. the patient passed to the u.s. from liberia. passing through brussels and washington dulles airport. how can officials use technology to try and stop the spread of ebola? i spoke with patrick tucker and started by asking whether anything can be done at airports to keep someone with ebola from get on a plane? >> at this point in time, not a great deal at all. some airports like in south
africa and nigeria and asia are experimenting with thermal scanners. they scanned for elevated human temperature. they were in place across the united states as well following the 2009 sars outbreak which was fever-based. the problem with that is while it provides a certain amount of public comfort, but it is not going to be an effective stop. you can carry ebola for as long as 21 days before you begin to present symptoms. when you start to present symptoms is when you run the risk of passing it to others. the scanners are not going to catch ebola that is in people who have not yet presented. it is cosmetic and that's the only effective means we have right now aside from taking a blood sample. in nigeria, if you present with elevated fever and if they have suspicion that you might be an ebola carrier, they pull you aside and do a blood test on you and that takes about two hours. that seems to work ok in nigeria
but it's completely impractical in a place like dallas or atlanta or perhaps even brussels. that is not being done right now. we are about two years away according to people i've spoken to from a point of care diagnostic tests, handheld test, that can screen for ebola on the spot without inconveniencing a lot of passengers and causing flight delays. that does not exist at this time. >> you have written about how big data otherwise can be used to track disease. how can data be used to track ebola? >> there is a lot of different tools right now that help --
health researchers can you rapid using to try to figure out where the disease is emerging and where will go next. researchers from around the world are relying on open source data called health map. it is basically google but instead of -- presenting with search results, it presents you with the most recent instances of ebola showing up on the internet and social network posts. it might show up in news articles and things like that. it does a deep analysis of all the material that is specific and relevant to new cases of a -- ebola and where it is showing up.
there is another project that is a big database project from a researcher in washington, d.c. and it scans news reports for new instances of symptoms of ebola or ebola-like symptoms. that is a big one that people are using. another method that researchers are using is called contract tracing where you go back through all the different associations and different contacts that an ebola patient may have had, people they spoke with, places they went, and you sort of map there like that to see who else may have been vulnerable or subject to the disease by interacting with that person. >> something else that holds promise is satellites. how can satellites track ebola? >> ebola is dangerous and we don't want workers getting too close to it who want to observe in a credible way when it is showing up. military uses high-resolution satellites for things that are like this all the time but they are looking for different signs of intelligence. you can use those same assets in a public sense for ebola
tracking. there is a group of researchers out of the university of virginia that created a model that predicted how much the spread of flu in a particular place based on the occupancy of hospital parking lots. based on how people are moving, where they are going, and if they are going to go and seek help or buy supplies in a particular type of store -- is that if there is crowd there, you can predict or model the spread of a particular illness through particular neighborhood and you can do it from space without subjecting a lot of people to potential harm. >> patrick tucker. well, the tech app wars are firing up. google is firing back with its own. we take a look at that next.
facebook just launched a new d platform called at last. it will allow them to buy ads on not facebook websites. they are also launching new ad tools. cory johnson spoke with a news reporter who covers facebook. cory started by asking if facebook's announcement is indeed a game changer. >> facebook has been moving in this direction for a long time now. earlier this year they allowed mobile up risers -- advertisers to use their applications. they allowed shopping tracking across the web, and they bought live rail. they have been moving in this direction but this is actually a new announcement for them. this ad server did not exist before. it is going to make a difference in the industry because they are tracking people by their facebook identity, not by cookies on browsers as they have in the past. >> you work with facebook a lot. this seems like a huge deal to be able to take their ad
platform beyond facebook. >> it is really exciting. facebook is starting to lay the groundwork for the next generation about technology. it is a like how stock traders would use it. helps them to measure their campaigns, which is incredibly strategic. if you own the tool that helps a marketer measure what they are doing, it becomes incredibly important. >> this is really about monitoring, not about where the ads are going, that was already happening on some level. >> it is both. is figuring out where to show the ads, and the measuring the impact.
facebook is really taking that to the next level. this is the next generation of technology and is exciting to see that happening. >> how big is facebook outside of facebook? >> because it covers most of the world's internet population at this point it is really covering the whole internet, they are everywhere. there is nowhere that you can't go on the internet that is not touched by facebook in some way. the login, the like button, the ad. >> is there a notion that facebook -- it is interesting that they split off messinger as a separate app and i.n.s. gram as a separate app. and they looking at the web of a universe of different sites, and different apps that these book ads will be run. >> this is the beginning of a big move. the future of facebook is not just in facebook itself, and it
is in the wider web. we have seen that in terms of their acquisitions too. they are also splitting up their advertising into the wider web. we will see this trend much more in the future. >> and perhaps, even the launch of google. is google a company they are after here? >> i think there is no question, they are after google. think about what google did on google for many years. they branched out to two become the dominant player. they spent billions of dollars and thousands of engineers on building these ad technology products. facebook is saying we are going to compete. >> is there a way that an advertiser has are at brought out to the world where facebook is completely different in a different way? >> they are different in the data that they store about their users and their ability to talk to those users as individuals.
advertising to people, not to machines, not to cookies, but to actual individuals. >> and demographics. i think of advertising in terms of how old someone is, or where they live, or how wealthy they are. is google that smart, or is it different? >> you do not look 1000 years old. >> thank you. that's all the plastic surgery. >> google and facebook are incredibly smart about this, and they are both moving the all ford very aggressively. it is going to be quite the horse race. it will be exciting to watch in the coming years. >> up next, will bigger be better for tivo? they just unveiled a new mega d.v.r. allowing you to record three years worth of shows. that's next.
>> welcome back to the best of "bloomberg west." i'm emily chang. tivo is coming out with a mega d.v.r. that can record three years of programs. tivo plans to sell a 24 terabyte, 40-pound mega dvr next year. but is bigger better? who is tivo targeting? cory johnson spoke with their c.e.o. and started by asking who the target customer is. >> we started the whole notion of on-demand viewing, being able to watch what you want to watch when you want to watch it. many people, with typical satellite or cable dvr runs into the issue of the record something and it knocks something else out that they have not watched yet but wanted
to see. we solve for that issue completely. we have many uses for this. on tivo we have collections, collections of the best 100 films of all time. you have seen those lists. with one click of the button, you can record the best 100 films of all time, and have them there. imagine having friends over to say you can pick any one of them. the capacity here is really something. we decided to take it to a whole -- the next level with tivo mega. it really gives the viewer the ability to have all choices anytime they want. >> you have some new partnerships with so many of the cable providers across the world.
i wonder, some speculation on market, with the cord cutting play this gets very interesting to people who have their content will want to keep their content, and not have so many netflix and so on because they can just do what you're describing. is this a threat to netflix and amazon prime? >> i do not think so. we're really after serving all television viewers. i'm a cable tv guy going way back. being a bloomberg fan, i couldn't go without cable tv. cable tv and having all of those channels to me is critical to the best experience. our retail box is able to take all of that and put it together with netflix and hulu. it has the ability to get everything the way the iphone can in the mobile phone device. what we're looking for with the mega is people will have huge storage needs. it is not for everybody, but it gives people who like to record a lot and have tons of choice to always have something waiting
for them. that opportunity. we have an over-the-air product for people who do not want cable or satellite, but still want a dvr, you used to be able to have that with aereo. but they got struck down by the supreme court, so we are the legal way to have it. you can get it to your smart phone or tablet and be able to watch it that way and have it put together and fully integrated. we know that there are many different ways for people to watch television, many different needs they have in terms of the am of choice that they want to store.
>> we were talking about it over the break. i'm a tivo user in my home and i have been for a long time, but i also had issues with my comcast relationship with tivo. i had the box replaced several times. i wonder if terms of those partnerships with comcast in particular, you're now, i think in every comcast market, up to 12 since august. does that provide for you a lot more growth? >> we are the key provider in advanced television. there are more cable operators in the united states than anybody else. we serve 19 of the top 25 operators.
they use us as their core piece of how they generate an advanced television better u.i. experience. with comcast, we have a different relationship. they said look, we want tivo to be fully available in all of our markets. we want to be able to have the content and video on demand library that they developed available fully integrate as part of tivo. somebody can have all the comcast channels and takeover everywhere, the streaming services of hulu, etc. that is a unique thing for people to get in comcast market. we believe that our retail comcast offering gives us some really interesting growth prospects. we entered into a deal recently are come cast to get to -- comcast to get security. how you make sure that the product is secure in the box. that means no cable card in the future.
>> welcome back to the best of "bloomberg west." i'm emily chang. apple plans to add a gold color option to its full-size ipad in an effort to boost slumping tablet sales. new versions of the company's 9.7 inch ipad will include gold is a choice of the rear metal cover. the new ipads are expected to be unveiled this month. for more, i asked my guest if a
gold ipad would be cool? >> i think people want a technology product as a fashion accessory and a state of mind. gold is a luxury item. i'm excited about what apple is doing. >> what about when it comes to the watch? is that something people want to wear? >> apple obviously is such a smart marketing company. they will have figured this out ahead of time. it's interesting they launched in three different categories. whether you are going to have in addition or the sports or the high-end luxury item but it reaches across different market segments and gives people the power of choice. i'm excited to see all of them. >> how much will it cost? >> i don't know, some say it is $3000 to $5000.
>> so you really have to want that gold watch. at the big event a couple of weeks ago were they unveiled the watch and the new phone, you have a lot of celebrities there. u2, gwen stefani, kevin durant -- is it more than just promotion? >> i think it is a larger moment in time. i think it is about a movement in popular culture. i think this is about the fact that apple is not just your technology company. apple is a global consumer company that goes across fashion entertainment and technology. apple has brought technology into the popular culture. look at how the fashion
industry, the fashion press are connecting with it. designers were in paris meeting with fashion industry leaders like anna wintour. people are salivating about the apple products. >> apple has hired angela behrens and we have a clip. we have a clip of that moment. let's take a listen. >> it was a great collaboration and i loved working with technology. it's really just a beginning. >> she's got on top of fashion most -- fashionable sunglasses. is google glass cool? is wearing this stuff cool? >> wearables i think are really cool. people want to have access to information and want to be able -- whether it is something as pedestrian as understanding health or lifestyle or connecting in a new way -- that is cool.
that is mainstream now if you think about where that is going. whether you are going to wear it as a glove or on your wrist, that will be debatable. that will be the fun part to watch. >> is the fashion industry going to truly embrace wearables? or is it just a gimmick? is anna wintour going to be wearing an apple watch every day or just experiment?
>> i don't know about whether she will do that but i bet she has an iphone. the natural extension is where does one go? i think this is about popular culture. i think this is a whole movement that we have never seen before. what apple has done so smartly is hiring -- the best in the fashion industry. they have hired the best of entertainment and the best of technology with their current leadership team and the best of design. this is an extraordinary leadership team that is the best in class across global industries. it's why i think everyone is excited. >> that does it for this edition of the best of "bloomberg west" p.m. you can catch us monday through friday.
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